Swedish Match Gains on Report of Possible Bid: Stockholm Mover

Swedish Match AB, a maker of smokeless tobacco products, rose the most in two months after U.K. newspaper the Daily Mail reported the company may be a takeover target.

The shares climbed as much as 5.5 percent to 255.60 kronor, the biggest intraday advance since May 10 and the highest level since October 2012. The stock was up 3.1 percent at 249.90 kronor as of 1:47 p.m. in Stockholm, taking the advance to 15 percent this year, and giving the company a market value of 50.5 billion kronor ($7.6 billion).

There is “growing speculation” of a 350 kronor-per-share-bid from one of the industry’s biggest companies, with Imperial Tobacco Group Plc, Europe’s second-biggest tobacco company, the favorite suitor, the newspaper said. Imperial Tobacco spokesman Simon Evans and Swedish Match spokesman Emmett Harrison both declined to comment on the report.

Stricter government restrictions on cigarettes are hurting tobacco companies and pushing them to develop smokeless products. Swedish Match is the world’s biggest maker of a moist powder tobacco called snus and also makes products including Longhorn snuff and Red Man chewing tobacco.

While a deal would have “some strategic merit,” the bid speculation appears unfounded, Erik Bloomquist, a London-based analyst at Berenberg Bank said in a note.

While Berenberg has argued in the past that Swedish Match is an inevitable takeover candidate because of its concentration on smokeless tobacco, the bank is skeptical of a bid at this time, partly because such a deal would make it hard for Imperial Tobacco to keep an investment-grade credit rating, Bloomquist said.

Snus is moist powder tobacco usually portioned in pouches that resemble miniature versions of used tea bags, and these are consumed under the upper lip. It was banned by the European Union in 1992. When Sweden joined the EU in 1995, it got an exemption from the ban and has for years tried to convince the EU to scrap the prohibition in the other member states.

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